MUMBAI, May 16 (Reuters) - Indian benchmark bond yield eased to its lowest level in seven weeks on Thursday, tracking a sharp drop in U.S. Treasury yields after inflation data, but profit booking from traders has capped further decline.

The benchmark 10-year yield was at 7.0617% as of 10:00 a.m. IST, following its previous close of 7.0821%. Earlier in the day, the yield had fallen to 7.0491%, the lowest since March 28.

"Offers are outpacing bids currently, and in such a scenario, it is very tough for the benchmark yield to convincingly break the 7.05% mark," a trader with a primary dealership said.

"As of now, the market sees a hard bottom at the 7.01%-7.02% level, and hence traders may not be comfortable at going heavily long."

U.S. yields dropped on Wednesday and eased further in Asian hours on Thursday after data showed U.S. consumer price inflation cooled in April, boosting expectations that the Federal Reserve will cut interest rates two times this year.

The consumer price index rose 0.3% last month after advancing 0.4% in March and February. In the 12 months through April, the CPI increased 3.4% after climbing 3.5% in March.

The 10-year U.S. yield and the two-year yield , a closer indicator of interest rate expectations slipped to their lowest levels in six weeks.

The 10-year yield was around 4.32%, with the odds of a rate cut in September rising to 75%, up from 65%. The futures market is now pricing 52 basis points of rate cuts in 2024, up from 42 bps before the inflation print, according to the CME FedWatch tool.

Investors will now focus on the response to the Indian government's second bond buyback in two weeks, as New Delhi aims to buy bonds worth up to 600 billion Indian rupees ($7.19 billion) later in the day. ($1 = 83.4450 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Janane Venkatraman)