NEW YORK (CNN/Money) - Though Wall Street has been roiled by a debate about the size of the Federal Reserve interest rate cut almost certain to come Wednesday, the debaters may be missing the point: What the Fed says could be more important than what it does.

Fed policy makers began a two-day meeting Tuesday afternoon to discuss the state of the economy and their target for short-term interest rates.

By relentlessly expressing concerns about the risk of deflation, however remote, Fed officials have built up market expectations for a rate cut for weeks, so almost no economists expect the central bank to throw investors a curve and not cut rates.

"There's no case for no cut at all at this point," said former Fed economist Wayne Ayers, now chief economist at Fleet Boston Financial. "There have been better economic numbers, but [policy makers] expect to see that. If I interpret what they've been saying correctly, this economy could grow 4.5 or 5 percent for a year without putting upward pressure on inflation."

The only question, then, is the size of the cut. According to a recent Reuters poll, a slim majority of the 21 banks that do business directly with the Fed expect the central bankers to cut their target for the federal funds rate, an overnight bank lending rate, by half a percentage point, to 0.75 percent, a level not seen consistently since 1958.

Kathleen Hays takes a look at the pros and cons of a quarter of a percentage point rate cut vs. a half a percentage point rate cut by the Federal Reserve. Play video (Real or Windows Media)

But a half-percentage-point cut is far from a sure thing. A Wall Street Journal article last week -- possibly the result of leaks by the Fed calculated to lower market expectations, some economists believe -- said the Fed was worried about the repercussions of taking the fed funds rate so low.

If such caution wins the day, then a quarter-percentage-point cut will result. The central bank is due to announce its rate decision Wednesday afternoon. (For more on the debate over the size of a Fed cut, click here).

But in either case, the Fed cannot avoid the daunting task of managing investors' expectations about the future of interest rates. Mostly, it will need to convince the markets it's not going to raise rates any time soon. But it can't directly say that, since it needs to keep open the option of jacking up rates if economic growth suddenly explodes.

"Policy makers want to make sure in the language of their statement that whatever they do, it's meant as insurance -- they don't want to create alarm about the state of the economy, but they also don't want to create alarm in the bond market about the end of accommodative policy," said Tony Crescenzi, bond market strategist at Miller Tabak & Co.

It's also critical for the Fed to make the distinction, as it did in its policy statement in May, between inflation and economic growth. In May, the Fed said that, even though the economy was still growing, it might not be growing quite fast enough to fuel inflation.

The fear is that disinflation -- or falling inflation, which sounds like a great thing -- could eventually turn into deflation, which is a very bad thing. When there's deflation, companies can't raise prices to keep up with wage growth, so they cut workers, which hurts the economy, and that makes prices fall even further.

"They're looking at an economy that's not exceeding potential, where there will be residual excess production capacity, despite an economy that looks to be healthy for all intents and purposes," said Eric Green, a senior economist at BNP Paribas. "So there's no upward momentum for inflation."

The Fed pushes interest rates up when it wants to slow the economy down and fight inflation, and cuts short-term rates when it wants to lower borrowing costs and get the economy moving faster.

In response to a recession, terror attacks, corporate scandals, war and other woes, the Fed has cut the fed funds rate 12 times since the start of 2001, to a 41-year low of 1.25 percent.

Other, longer-term rates have also tumbled to historic lows. Most important, mortgage rates are lower than ever, encouraging a boom in housing that's helped homeowners feel wealthier and allowed people to refinance mortgages at lower and lower rates, putting more cash in their pockets.

Though economic growth in 2002 and 2003 has been too sluggish to fix the weak labor market, most economists, including Fed Chairman Alan Greenspan, believe the economy will be stronger in the second half of this year.

Nevertheless, the Fed's most recent "beige book" study, which compiles reports of economic conditions around the country and is used in policy-making decisions, found an economy still in need of a boost, or at least a little insurance to help ward off possible deflation.

Some economists worry, however, that a rate cut is not the right medicine for the economy's ills. Merrill Lynch chief investment strategist Richard Bernstein has argued that, by extending cheap credit to troubled companies, ever-lower rates will only make the problem of over-capacity worse.

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And many economists are worried that lower rates could cripple some money market funds, which are big buyers of commercial paper, cheap business loans that could help encourage future business expansion and hiring.

Other economists worry that the Fed will only encourage more investment and credit bubbles, which could result in painful, corrective rate hikes in the future.

"All in all, the economy is not weak enough to warrant another rate cut," said Brian Wesbury, chief economist at Griffin Kubik Stephens & Thompson, a Chicago investment firm. "However, the Fed will give us one anyway. As always, the end result of excessive ease by the Fed will be higher rates in the years ahead."