By Indradip Ghosh

BENGALURU (Reuters) - The U.S. Federal Reserve will cut interest rates by 25 basis points at each of the remaining three meetings of 2024, one more reduction than predicted last month, according to a slim majority of economists polled by Reuters who said a recession is unlikely.

The change in Fed rate cut calls follows a weaker-than-expected July U.S. jobs report, which encouraged interest rate futures traders to price in as much as 120 basis points of reductions in 2024 earlier this month. That pricing has reduced to roughly 100 now.

Investors also said a violent, but brief market sell-off also was a driver of aggressive rate cut calls, related to the unwinding of large leveraged positions as a result of a sudden, sharp rise in the Japanese yen.

Although some Fed officials have hinted rate cuts are coming, most economists in the Aug. 14-19 Reuters poll were not expecting a rapid series of rate cuts. Recent data, including last week's strong retail sales report, suggests the economy is performing relatively well even as inflation recedes.

The U.S. central bank will cut the federal funds rate by 25 basis points in September, November and December taking the range to 4.50%-4.75% by end-2024, according to 54% of those polled, 55 of 101.

Markets, which were earlier betting on a half-percentage-point cut in September, are currently pricing around 70% probability of a quarter percentage point cut next month.

Over a third, 34 of those polled, predicted two rate cuts this year and one respondent forecast only one rate reduction. Eleven economists expected the Fed to cut rates by 100 basis points or more.

"The basis for the cuts that we have is mostly because inflation is coming down. It's not so much that activity is slowing ... We see a pretty resilient economy that's growing near trend and with that, we think inflation only ebbs gradually," said Jonathan Millar, senior U.S. economist at Barclays.

"The labor market is hanging in there just fine. It's gradually cooling, but we don't expect it to have really material weakening. The unemployment rate is maybe going to add another 10th or so from where it is. There's not really any reason for them (the Fed) to panic."

The unemployment rate is forecast at around the current 4.3% through 2026. Inflation is forecast to ease only slightly over the coming two years, according to median forecasts in the poll.

All measures of inflation polled - the Consumer Price Index, core CPI, personal consumption expenditures price index and core PCE - are expected to stay above 2% until at least 2026.

Despite recent easing, wage growth has remained above the 3.0%-3.5% range seen as consistent with the Fed's 2% inflation target.

The Fed was expected to deliver a 25 basis point cut each in the four quarters of 2025. Markets are currently pricing around 200 basis points of reductions by end-Q3 2025.

RECESSION UNLIKELY

The U.S. economy grew 2.8% annualized in the second quarter, much faster than the 2.0% expected by economists. Growth is seen in the poll as averaging 2.5% this year, faster than what Fed officials currently see as the non-inflationary growth rate of 1.8%.

Two thirds of common contributors upgraded their 2024 growth outlook from last month. The economy was predicted to grow 1.8% next year.

Economists in the poll broadly expect the economy to expand at around its trend growth rate at least until 2027. The median forecast from a smaller sample who provided a view showed the probability of a recession at just 30% - an outlook which has not changed much since the start of this year.

"We're not convinced there's a downdraft in activity around the corner that's going to prompt large rate cuts from the Fed," said Michael Gapen, chief U.S. economist at Bank of America.

"There's reason to believe the July employment report was adversely affected by weather and therefore was a false signal about the health of labor markets and the economy. We're counting on subsequent data validating that story."

Markets and economists will keep a close eye on Fed Chair Jerome Powell's remarks on the economic outlook on Friday, the first full day of the Kansas City Fed's annual economic symposium in Jackson Hole, Wyoming.

(Other stories from the Reuters global economic poll)