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By Rae Wee
SINGAPORE, April 28 (Reuters) - The Japanese yen fell on Friday after the Bank of Japan (BOJ) left its ultra-easy monetary policy unchanged even as it scrapped a pledge to keep interest rates low, while the U.S. dollar was on track for a second straight monthly loss.
The outcome of the new BOJ Governor Kazuo Ueda's first policy meeting was closely watched. As expected, the BOJ said it would maintain ultra-low interest rates, and unanimously decided to make no changes to its yield curve control (YCC) policy.
However, the central bank removed a pledge to keep interest rates at "current or lower levels" and said it would "conduct a broad-perspective review of monetary policy".
That review is expected to last around one to one-and-a-half years and would lay the groundwork for Ueda to gradually phase out his predecessor's massive stimulus programme..
The yen tumbled to a one-week low following the decision, and was last more than 0.7% lower at 134.93 per U.S. dollar.
"The hopes of a policy change has been somewhat dampened by the review," said Moh Siong Sim, a currency strategist at Bank of Singapore, adding that the likely length of the review might have dampened hopes of an imminent move in the policy setting.
"For now, the outcome is read as a dovish outcome."
Earlier on Friday, however, government data showed core consumer prices in Japan's capital, Tokyo, rose 3.5% in April from a year earlier, beating market forecasts in a sign of broadening inflationary pressure in the world's third-largest economy.
"This puts pressure on the BOJ, they might do something in the near future," said Tina Teng, market analyst at CMC Markets.
In the wider currency market, the U.S. dollar rose broadly on Friday, drawing support from data pointing to still-sticky inflation in the United States, which reinforced expectations for a 25-basis-point rate hike at next week's FOMC meeting. .
Against the greenback, sterling fell 0.14% to $1.2483, while the Aussie edged 0.29% lower to $0.6611.
The U.S. dollar index gained 0.22% to 101.67, rebounding from a near two-week low struck on Wednesday.
However, the index remained on track for a monthly loss of close to 1%, after having fallen about 2.3% in March.
Data released on Thursday showed that while U.S. economic growth slowed more than expected in the first quarter, consumer spending, which was accompanied by a rise in inflation, accelerated.
A measure of inflation in the economy, the price index for gross domestic purchases, rose 3.8% in the first quarter, slowing from 3.6% in the fourth quarter, while the core PCE price index rose 4.9% in the first quarter, accelerating from 4.4% in the fourth quarter.