[Citigroup: us labor market is still tight interest rates will reach 5.50-5.75%] April 29, Citigroup analysts believe that the US labor cost index recorded a quarterly rate of 1.2% in the first quarter, indicating that the potential driver of excessive inflation has hardly abated. This is a tight labor market that pushes up labor costs and then passes on to higher prices. Since growing at about 1.2 per cent in the third quarter of 2021, the labour cost index has remained within the month-on-month range of 1.1 per cent Mel 1.4 per cent, reminding Fed officials that the nature of high inflation is not short-lived. A very simple model shows a clear relationship between employment costs and future service price increases, and suggests that a year from now, core non-housing services inflation in CPI will remain above 5 per cent. This should be frustrating for Fed officials. Sustained higher-than-expected inflation is the underlying reason why we expect to continue to raise interest rates this year, with the federal funds rate expected to reach 5.50-5.75%.