New York Fed President John Williams indicated that he doesn't see clear-cut evidence right now that the Fed must raise interest rates to respond to persistent inflation.

In an interview with CNBC, Williams said the current spate of rising prices is du in part to passing causes: one-time price increases from the Trump administration's tariffs and higher energy prices from the Iran conflict.

It is not yet certain, he said, that those trends are snowballing into a broader bout of inflation that the Fed must respond to.

"There's no clear signs right now...whether monetary policy currently is sufficient to make sure we bring inflation back to target in the next year or two, or whether we need to see further action to do that," Williams said.

Treasury yields are reversing their gains from earlier in the session across the curve.

As the head of the New York Fed, Williams is the No. 2 member of the Fed's rate-setting committee and has often represented the thinking of Fed officials near the center of the policy debate. His comments suggest that despite rising inflation concerns among some committee members, a rate hike at the Fed's next meeting in two weeks is still not a lock.

Earlier this morning, Wall Street traders saw roughly two-in-three odds the Fed would raise interest rates by a quarter point to a range of 3.75% to 4% later this month, according to their bets in futures markets.

Fed officials will get one more month of inflation data, due next week, before they have to make their September decision. But Friday is the last day that Fed rules permit them to comment publicly ahead of the decision.

Traders will also be watching closely for comments from another influential Fed official, Governor Christopher Waller, tomorrow.