The Citizens are looking to win the competition for the second time in three years under Manuel Pellegrini.
However, City have the distraction of the first leg of their Champions League last-16 clash against Dynamo Kyiv on Wednesday night.
Liverpool, meanwhile, were impressive 4-1 winners against the Citizens in their Premier League meeting this season after Eliaquim Mangala’s own goal and efforts from Philippe Coutinho, Roberto Firmino and Martin Skrtel.
Former Chelsea manager Grant refused to write off Liverpool’s chances of getting a result against cash-rich City at Wembley.
“Man City have more quality but Liverpool beat Man City in the league,” Grant told Sky Sports.
“Anything can happen because it is one game. Liverpool are still a big club. It will be very interesting.”
Liverpool are looking to win the competition for a record ninth time after the Reds beat Stoke on penalties in their semi-final at Anfield.
The Citizens were 4-3 winners on aggregate against Everton after a 3-1 home leg win at the Etihad Stadium last month.
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