The Fed has previously kept rates elevated to tamp down inflation. Cutting rates, conversely, typically stimulates economic activity, providing a boost to growth.
"It's a bit of a dilemma for the Fed," Pearce said, as there could be conflicting signals.
ING analysts expect the Fed to signal its base case remains two 25 basis point cuts this year, noting "there is no pressing need for additional rate cuts given that unemployment is low and inflation is still tracking hot."
In February, government data showed that the unemployment rate was a relatively low 4.1 percent, with the labor market remaining stable.