• Japanese stocks led losses regionally, with the Nikkei 225 falling 4% in Monday trade. It later pared some of those losses but still closed 3.29% lower at 28,010.93.
• China on Monday announced that the one-year Loan Prime Rate (LPR) was kept unchanged at 3.85% while the five-year LPR was also held steady at 4.65%. That was in line with expectations of majority of analysts in a snap Reuters poll, who had predicted no change to the one-year Loan Prime Rate as well as the five-year LPR.

SINGAPORE — Shares in Asia-Pacific dropped on Monday, as Japan's markets plummeted. Meanwhile, China kept its benchmark lending rate unchanged.

Japanese stocks led losses regionally, with the Nikkei 225 falling 4% in Monday trade. It later pared some of those losses but still closed 3.29% lower at 28,010.93. The Topix index shed 2.42% to finish its trading day at 1,899.45.

Losses were seen in most sectors in Japan, with shares of automakers such as Nissan and Honda falling 4.07% and 3.93%, respectively. Shares of Fanuc slumped 5.62%. Among financials, Mitsubishi UFJ Financial Group shares fell 2.72% and Mizuho Financial Group declined 2.25%.

"At this stage, we're probably in a holding pattern as far as most Japanese names are concerned," Lorraine Tan, director of equity research in Asia at Morningstar, told CNBC's "Street Signs Asia" on Monday.

"The Japanese market had had a nice run recently in the past month or so," she said, adding that valuations are close toward the "fair" — rather than "attractive" — level.

Markets in Asia-Pacific slip

Elsewhere in Asia-Pacific, Hong Kong's Hang Seng index dropped 1.28%, as of its final hour of trading. Mainland Chinese stocks closed higher as the Shanghai composite rose 0.12% to 3,529.18 and the Shenzhen component edged 0.395% higher to 14,641.29.

South Korea's Kospi declined 0.83% on the day to 3,240.79. Shares in Australia slipped, with the S&P/ASX 200 shedding 1.81% to close at 7,235.30.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.29%.

"Markets continue their post-FOMC slump as concerns over rate normalisation continues to keep a lid on risk sentiment," analysts at Singapore's OCBC Bank wrote in a note dated Monday.

Last week, the U.S. Federal Reserve raised its expectations for inflation and moved forward the timeline of its interest rate hikes, setting off a surge in the dollar index against a basket of its peers.

The U.S. dollar index was at 92.151 after a recent climb from levels below 91.2.

China on Monday announced that the one-year Loan Prime Rate (LPR) was kept unchanged at 3.85% while the five-year LPR was also held steady at 4.65%. That was in line with expectations of majority of analysts in a snap Reuters poll, who had predicted no change to the one-year Loan Prime Rate as well as the five-year LPR.

Currencies and oil

The Japanese yen traded at 109.88 per dollar, stronger than levels above 110.5 against the greenback seen last week. The Australian dollar changed hands at $0.749, still struggling to recover after its fall last week from above $0.768.

Oil prices were higher in the afternoon of Asia trading hours, with international benchmark Brent crude futures up 0.19% to $73.65 per barrel. U.S. crude futures advanced 0.25% to $71.82 per barrel.

— CNBC's Patti Domm contributed to this report.