(Bloomberg) -- The yen fell and government bond futures reversed losses after the Bank of Japan said it would maintain its ultra-loose monetary policy but announced a review, in its first meeting under new governor Kazuo Ueda. 

The yen weakened 0.7% against the dollar to 134.90, while government bond futures reversed losses to trade higher. Japanese bank shares fell. The central bank will keep its 0.5% ceiling for 10-year government bond yields and maintain its short-term policy rate at minus 0.1%, it said.

The BOJ will conduct a “broad-perspective review” of policy, with a planned time frame of around one to one-and-a-half years. It scrapped its guidance on future interest rate levels.

“This result certainly fits closer to what the market was expecting in terms of echoing patience and restraint,” said John Bromhead, strategist at Australia & New Zealand Banking Group Ltd. in Sydney. “With the possibility of a more hawkish Fed next week, I think we could see dollar-yen test 136 over coming sessions.”

Still, speculation is likely to persist that Ueda will revise yield-curve control in the coming months. The BOJ’s efforts to defend its 10-year yield cap through massive debt purchases have been distorting the bond market and rising inflation has raised concerns that super-easy policy is unsustainable.

“We still look for the removal of the YCC regime and an interest rate hike at some stage this year amid broadening inflationary pressures as well as from upward pressure on wage growth in Japan,” said Christopher Wong, an Oversea-Chinese Banking Corp FX strategist based in Singapore. “In the near term, dollar-yen may firm on Bank of Japan disappointment.”

A majority of economists in a Bloomberg survey expect Ueda to alter policy in June or July.

The Nikkei reported earlier Friday that the BOJ was likely to avoid changing yield-curve control, was planning to review its forward guidance and was considering a comprehensive review of past monetary easing.

--With assistance from Marcus Wong and Ruth Carson.

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