White House economic adviser Kevin Hassett, the front-runner to be the Federal Reserve's next chair, told the WSJ CEO Council Tuesday that there is "plenty of room" to cut interest rates further, though he added that if inflation rises the calculation may change.

"What we have to do is recognize that like in the '90s, we're in a potentially extremely transformative time," Hassett said at the WSJ CEO Council, referring to the possibility that artificial intelligence can supercharge economic growth without overheating the economy.

Asked what he would do if President Donald Trump wanted him to cut rates and he did not think it was the right thing to do, he said he would adhere "to my judgment, which I think the president trusts," according to a report from Bloomberg News.

"If inflation has gone from 2.5% to 4%, you can't cut rates then," according to a tweet from Wall Street Journal Fed reporter Nick Timiraos.

The Fed earlier on Tuesday began its last meeting of the year, and on Wednesday at the meeting's close is expected to lower rates by a quarter of a percentage point for a third time this year but to signal little further easing next year.

Trump earlier on Monday told Politico he'd make support for immediately slashing interest rates a litmus test in his choice of a new Fed chair.