Indian government bond yields were largely unchanged early on Thursday, as market participants awaited the Reserve Bank of India's monetary policy decision as well as guidance on the interest rate trajectory.

The 10-year benchmark 7.26% 2032 bond yield was at 7.2850% as of 9:35 a.m. IST, after closing at 7.2750% on Wednesday. India's financial markets will remain shut on Friday.

"All eyes are now on the RBI governor and what guidance he gives on rates as well as an outlook on inflation and growth as a rate hike is already fully priced in," a trader with a private bank said.

The RBI is widely expected to raise its benchmark rate for the seventh consecutive meeting by 25 bps to a seven-year high of 6.75%, and leave the door open for more hikes to bring back inflation within its target range, economists said.

Also read: Why RBI is likely to hike the policy rate, again

Retail inflation rose 6.44% year-on-year in February and has remained above the central bank's mandated target band of 2%-6% for 10 out of the last 12 readings.

Upside risk to RBI's January-March inflation forecast, firm core and above-target inflation reading in January and February are likely to see a majority in the monetary policy committee vote for a 25-bps hike, with an unchanged stance, DBS said.

"Beyond that, we expect a pause on rates to allow the lagged impact of hikes to filter through, a likely benign inflation profile and attention on growth conditions."

Also read: Time for RBI to pause

Meanwhile, easing U.S. yields also aided similar moves in local bonds. The 10-year U.S. yield eased to 3.30% on Thursday as job openings indicated a dovish tilt from the Federal Reserve.

Traders will also await the first government debt auction of the current financial year. The government will raise ₹33,000 crore through the sale of bonds later in the day, which includes a new five-year bond as well as 7.26% 2033 bond that will replace the existing benchmark note soon.