MUMBAI, Sept 15 (Reuters) - Indian government bond

yields are expected to start a crucial week steady on Monday,

while the market gears up for the all-important interest rate

decision from the U.S. Federal Reserve.

The yield on the 10-year benchmark note is

expected to be in the 6.47%-6.51% range, a trader said at a

private bank. It closed at 6.4867% on Friday.

"We are finally nearing what could be one of the major

events for the near term, and till then, bonds could be choppy,

but the range should be tight," the trader said.

The Fed's decision is due after market hours on Wednesday,

wherein a 25-basis-point rate cut is already factored in, with a

thin possibility of a 50-bps move.

Beyond the decision itself, markets will scrutinize the

forward guidance and rate projections for signals on the

likelihood of further cuts in 2025.

The odds of an aggregate of 75 bps of rate cuts from now

through December stand at 83%, up from 73% last week, according

to the CME FedWatch Tool.

The 10-year U.S. Treasury yield continued to remain in the

4.00%-4.10% range, with expectations of a break to the downside

if the Fed commentary is dovish.

Back home, India's consumer price inflation rose to 2.07% in

August, in line with Reuters poll, but higher than a revised

1.61% in July.

"While we see a pause by the Reserve Bank of India in the

upcoming policy, we do see some scope for rate cuts worth 25-50

bps opening up from December policy if downside risks to growth

materialise and the Fed moves ahead with aggressive rate cuts,"

said Upasna Bhardwaj, chief economist at Kotak Mahindra Bank.

RATES

India's overnight index swaps are expected to be flat ahead

of the Fed policy decision.

The one-year OIS rate ended at 5.4750%

and the two-year OIS rate settled at 5.45%.

The liquid five-year OIS rate was at 5.6925%.

KEY INDICATORS:

** Benchmark Brent crude futures were down 0.4% at

$67.25 per barrel, after rising 1% in previous session

** Ten-year U.S. Treasury yield was at 4.0600%;

two-year yield at 3.5580%

** Government to switch bonds worth up to 300 billion

rupees ($3.40 billion)

($1 = 88.2687 Indian rupees)