MUMBAI, Dec 7 (Reuters) - Indian government bond yields dipped only slightly on Thursday, as the Reserve Bank of India's (RBI) monetary policy decision continues to be a major focus area for the market, which is currently not reacting much to declining oil prices.

The 10-year benchmark bond yield was at 7.2462% as of 10:00 a.m. IST, after ending the previous session at 7.2528%.

"Bond yields will not move much, until the central bank policy guidance is out, and if there is dovishness, then we would see a combined impact of oil as well as continuously falling U.S. yields," a trader with a private bank said.

Oil prices plunged on Wednesday, as worries about global fuel demand mounted after U.S. data showed a larger-than-expected rise in gasoline stocks, while concerns over China's economic health and future fuel demand also weighed.

Falling oil prices bode well for the inflation outlook for import-dependent nations like India.

India's November retail inflation data is due next week, with the reading expected to rise above the central bank's upper tolerance ceiling of 6%, according to Barclays.

The RBI's monetary policy decision is due on Friday, in which the central bank is expected to hold rates at 6.50% for a fifth consecutive meeting, according to a Reuters poll.

Traders anticipate a hawkish undertone to the guidance, with the focus on inflation and liquidity management.

U.S. yields remained subdued, with the 10-year yield below 4.15% levels, as weaker economic data and softer inflation reading have led to bets that the Federal Reserve may start cutting rates in the first half of 2024.

The odds for a rate cut in March stand close to 61%, while that for May is close to 87%.

However, India's overnight index swap market is signalling that the country's central bank will not rush to cut interest rates even if the Fed begins cutting rates early next year. (Reporting by Dharamraj Dhutia; Editing by Janane Venkatraman)