MUMBAI: Indian government bond yields were expected to open lower on Wednesday, tracking a sharp slump in oil prices, but traders said major market moves were unlikely before the Reserve Bank of India’s monetary policy decision due at 10 a.m. IST.

The benchmark 10-year yield was likely to move in a 7.20%-7.25% band till the monetary policy decision, a trader with a private bank said.

The yield ended at 7.2486% on Tuesday.

“There should be some buying at open … but large moves could be seen only after the policy guidance,” he added. Oil fell sharply, with Brent futures below $80 a barrel, back where it began the year.

India is one of the largest importers of crude oil, and price movements have direct impact on retail inflation.

The RBI’s Monetary Policy Committee is widely seen raising its key lending rate by 35 basis points on Wednesday, but markets will be looking to its outlook on growth and prices for direction.

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A strong two-thirds majority in a Reuters poll said it was still too soon for the central bank to take its eye off inflation, which slowed to 6.77% in October but has stayed above the upper end of the RBI’s 2-6% tolerance band all year.

However, Rohit Arora, senior emerging markets forex and rates strategist at UBS Global Research expects the benchmark bond yield to rise to 7.50% by end of March, on the back of higher government borrowings and resurfacing of demand-supply mismatches.