(Reuters) -The Federal Reserve will likely resume cutting short-term rates next week and continue on for the rest of the year to shore up a labor market that may have begun cooling well before President Donald Trump began imposing sharply higher tariffs, traders bet on Tuesday. 

The Labor Department's Bureau of Labor Statistics' preliminary annual revision to its payrolls data showed the U.S. economy likely created 911,000 fewer jobs in the 12 months through March than previously estimated, suggesting average monthly payrolls gains were likely less than half of the 147,000 that had been reported.

Coupled with recent labor market data that shows monthly employment gains have slowed even further, the report  "gives the Fed another reason to lower rates next week," BMO economist Sal Guatieri wrote, and likely cements the case for more rate cuts by year-end than the two that Fed policymakers had projected back in June.

After the data, traders stuck to their overwhelming bets that the Fed will reduce the policy rate from its current 4.25%-4.50% by a quarter of a percentage point at the central bank's September 16-17 meeting, and for a same-sized reduction at the Fed's following meeting in October.

While traders continue to see a third rate cut in December as far more likely than a pause, they pared their bets slightly on that meeting and further for 2026, slicing the probability of a fourth rate cut by January to less than 40% from nearly 50-50 before the revised data was released.

Fed Chair Jerome Powell said last month that rising downside risks to the job market may warrant some cautious policy easing, but central bankers remain wary of easing too much while inflation remains above their 2% goal and upside risks from Trump's tariff policy remain.

The Fed gets a pair of inflation reports later this week expected to reflect ongoing upward price pressures.