MUMBAI: Indian government bond yields are expected to be largely unchanged on Tuesday as market participants eye key inflation data in India and the U.S., followed by the Federal Reserve's monetary policy decision on Wednesday.

India's benchmark 10-year yield is likely to move in a 7.01%-7.05% range, following its previous close of 7.0331%, a trader with a state-run bank said.

"The focus would now remain on the inflation prints, with the U.S. data more crucial for markets as it could guide the Fed's guidance as well as the dot plot for 2024," the trader said.

India consumer inflation likely snapped a four-month downward trend in May due to rapidly rising food costs, according to a Reuters poll of 50 economists conducted between June 5-10 that predicted consumer price inflation (CPI) is expected to have picked up to 4.89% from April's 4.83%.

The data will be released after market hours on Wednesday. This would be followed by the U.S. retail inflation print. Reuters poll estimates the reading for 12 months to May at 3.4%, flat against April.

U.S. yields remained elevated, ahead of the data and Fed decision, especially after nonfarm payrolls data indicated strength in the economy which could ease the pressure of rate cuts from the central bank.

Futures are indicating a 50% probability of a rate cut in the September meeting, down from 60% a week ago. Markets are also pricing in 37 basis points of cuts in 2024 against nearly 50 bps last week, according to the CME FedWatch tool.

Back home, market sentiment may be further calmed after Prime Minister Narendra Modi's Bharatiya Janata Party retained key portfolios in the new coalition government, including the finance ministry.

A weaker majority for the new government may increase welfare spending but not result in additional borrowing, limiting a rise in bond yields, said Rajeev Mohan, president of treasury and global markets at Kotak Mahindra Bank. KEY INDICATORS: ** Brent crude futures 0.1% lower at $81.50 per barrel, after rising 2.5% in the previous session ** Ten-year U.S. Treasury yield at 4.4473%, two-year yield at 4.8657% ** Seven states to raise 77.50 billion rupees ($928.02 million) via sale of bonds ($1 = 83.5110 Indian rupees) (Reporting by Dharamraj Dhutia Editing by Eileen Soreng)