By Indradip Ghosh

BENGALURU (Reuters) -The Federal Reserve will lower its key interest rate by 25 basis points next week and again in December, according to a Reuters poll of economists who remain deeply divided on where rates will be by the end of next year. 

A month ago, economists had expected just one more cut this year. But the new forecast follows a recent shift in expectations by Fed policymakers toward additional reductions.

Caught between the dual risks of already-elevated inflation climbing higher due to tariffs and a further weakening of the labor market, the Fed appears to have prioritized the latter, prompting it to cut rates by 25 basis points last month for the first time since December.

All but two economists, 115 of 117, predicted the Fed would lower the interest rate again by a quarter point to 3.75%-4.00% on October 29. Two expected a 25 bps cut in October and a 50 bps cut in December.

That majority falls to 71% for another cut in December. The poll was conducted on October 15-21.

Financial market traders are more convinced, and have fully priced in two more reductions this year to interest rate futures contracts.

Many Federal Open Market Committee members, including Fed Chair Jerome Powell, have suggested they will keep focusing on the job market.

However, a government shutdown that so far has lasted three weeks has delayed key official data on employment as well as inflation, blurring the economic outlook.

"It would be fair to say approximately half of the current FOMC is more focused on the labor market and the other half on inflation risks," said Ryan Wang, U.S. economist at HSBC.

"The difficulty for the Fed is whether this job slowdown mainly reflects bigger labor demand versus labor supply. It's harder to be very precise about which factor is the bigger one, and that does have implications for how monetary policy should react to it."

Recent private-sector data indicate both layoffs and hiring are modest, suggesting no major change to the job market.

Poll medians predict the unemployment rate will average around the current 4.3% each year through 2027, largely unchanged from last month.

Inflation, which the Fed targets at 2% on the personal consumption expenditures measure, was expected to average above 2% each year through 2027, according to the latest poll.

Delayed official data due on October 24 are expected to show consumer inflation rose to 3.1% last month from 2.9% in August.

Economists were split seven ways on where rates would be by the end of next year, ranging between 2.25%-2.50% and 3.75%-4.00%. The increased uncertainty is partly as a result of speculation on who will be the next Fed chair after Powell's term ends in May.

A 76% majority of economists, 25 of 33, who answered a separate question said the bigger risk to Fed rate policy by the end of this cycle was that it would take rates too low.

President Donald Trump has been pressuring Powell to cut rates aggressively for months.

"The risk is we have more rate cuts next year," said Brett Ryan, senior U.S. economist at Deutsche Bank. "The risk of the Fed losing its independence is elevated relative to any prior administration."

(Other stories from the Reuters global economic poll)