Greater China markets were also pressured. The was off 0.05 percent by 3:25 p.m. HK/SIN. On the mainland, the edged down 0.23 percent to end at 3,358.1919 and the Shenzhen Composite fell 0.835 percent to close at 1,995.4221.

Down Under, the S&P/ASX 200 lost 0.94 percent, or 53.691 points, to finish the session at 5,655.4, with broad-based losses across most sub-indexes offsetting gains in energy stocks.

Across the Korean Strait, the Kospi edged down 0.24 percent to close at 2,406.5.

Japan's rose 0.18 percent, or 37.02 points, to close at 20,347.48 as automakers and most financials notched gains.

Most major indexes in Asia closed lower on Thursday after the dollar and U.S. Treasury yields spiked following big news out of the Federal Reserve.

The Fed announced Wednesday it would start winding down its $4.5 trillion balance sheet in October. While the Fed left interest rates unchanged — as was widely expected — it indicated that one additional rate hike was probable this year. The central bank kept its forecast for interest rates in 2017 and 2018, but lowered its expectation for the number of rate hikes between now and 2019 by one.

"The lack of movement in the dot [plot] signals that the committee is still comfortable that the recent dip in inflation is a blip," said Rob Carnell, Asia head of research at ING, in a note. The dot plot charts Fed members' targets for future interest rates.

Yields on the 10-year U.S. Treasury note rose to their highest levels since Aug. 8 on the news. The benchmark 10-year Treasury yield stood at 2.27 percent after climbing as high as 2.29 percent in the last session. Meanwhile, the two-year Treasury note yield stood at 1.43 percent after touching as high as 1.45 percent on Wednesday, its highest levels since 2008.

There were also foreign exchange moves following the announcement. The dollar index, which tracks the greenback against a basket of currencies, held onto most overnight gains to stand at 92.584 at 3:17 p.m. HK/SIN. Against the Japanese currency, the dollar extended gains to fetch 112.57 yen, after earlier climbing to its highest levels since mid-July.

"The Fed did not surprise, but the underlying signal was more hawkish than markets expected," said David Plank, head of Australian economics at ANZ, in a note.

Stateside, most indexes closed higher on Wednesday as financial stocks made gains. The Dow Jones industrial average tacked on 0.19 percent, or 41.79 points, to close at 22,412.59.

The Bank of Japan was also in focus after it announced Thursday it would keep monetary policy unchanged. While interest rate targets were held steady, one BOJ member opposed the decision as he said existing steps were not sufficient to achieve the inflation target, Reuters reported.

In corporate news, Japan's Toshiba said Wednesday it would sell its memory chip unit to a consortium backed by Bain Capital. While Bain had brought SK Hynix in on the deal, Toshiba did not mention the South Korean chip maker in its announcement, Reuters reported. The deal would be worth around 2 trillion yen ($18 billion), Reuters added.

Meanwhile, Western Digital said it would be commencing arbitration against Toshiba through its subsidiaries. The U.S. data storage company, which is involved in joint ventures with Toshiba, had been part of another group that had attempted to buy the Japanese conglomerate's flash memory unit. Toshiba stock retreated 1.59 percent by the end of the session, while SK Hynix closed up 2.97 percent.

Over in Australia, Commonwealth Bank of Australia announced Thursday that it would sell all of its Australia and New Zealand life insurance business to AIA Group for A$3.8 billion ($3.04 billion). Shares of the bank gave up earlier gains to closed down 0.29 percent. Hong Kong-listed AIA edged up 0.17 percent by 3:07 p.m. HK/SIN.

In other currencies, the euro continued to track lower against the dollar after falling steeply on the Fed's Wednesday announcement. The common currency fetched $1.1880 at 3:06 p.m. HK/SIN, a touch below a low of $1.1882 seen in the previous session.

In economic news, New Zealand's second-quarter GDP rose 0.8 percent. GDP in the first quarter was revised to 0.6 percent from 0.5 percent.

The Philippine and Taiwanese central banks also make rates decisions on Thursday.

On the energy front, oil prices slid after mostly flat trade earlier in the day. Brent crude futures were off 0.34 percent at $56.10 a barrel and U.S. West Texas Intermediate crude shed 0.3 percent to trade at $50.54. U.S. crude stockpiles had increased for three weeks in a row as oil production resumed stateside, Reuters reported Wednesday.