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  • Assuming your field ‘latest_news’ is taxonomy field with single selection and returning the term object.

    the ‘category_name’ is actually not name, it’s the slug. (i know… it’s confusing :/)

    So, you query should be:

    $category = get_field('latest_news'); // change your variable name so it doesn't confuse yourself
    $posts = get_posts(array(
        'posts_per_page'  => 2,
        'post_type'     => 'post',
        'category_name' => $category->slug, // this is using slug, not name
        'cat' => $category->term_id // or you can do this instead