MUMBAI: Indian government bond yields were largely unchanged in the early session on Wednesday, as focus remained on March inflation readings of India as well as the U.S. due later in the day.

The 10-year benchmark 7.26% 2032 bond yield was at 7.2234% as of 10:00 a.m. IST, after closing at 7.2224% on Tuesday. Indian financial markets will be shut on Friday.

"There is no particular trend at current levels, and hence till inflation data, bonds should be trading sideways," a trader with a primary dealership said.

India's consumer inflation likely eased in March to 5.80% due to softer food price rises, dipping below the Reserve Bank of India's (RBI) upper tolerance limit of 6% for the first time in 2023, a Reuters poll of economists found.

The data will follow the RBI's surprise move last week to hold its key interest rate steady at 6.50%, against analyst expectations of a 25 basis points (bps) hike.

The overnight indexed swap (OIS) rates, often seen as the clearest indication of future policy rate actions, are pricing in interest rate cuts before the end of 2023, analysts said.

The U.S. consumer inflation is the last print before the next U.S. Federal Reserve meeting on May 2-3. The data will play a pivotal role in the Fed's interest rate decision, with the odds of a 25 bps rate hike rising to over 71%.

Minutes of the Fed's latest meeting, in which it raised rates by 25 bps, are also due later in the day.

Traders also await central government bond sale, due on Thursday, where it aims to raise 390 billion rupees ($4.75 billion) through sale of debt, which includes a new three-year as well as a seven-year paper.

The RBI will also auction Treasury bills worth 320 billion rupees later in the day. ($1 = 82.0550 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Varun H K)