Share prices in Tokyo fell sharply on Thursday morning after the US Federal Reserve signaled that interest rates could be raised in the near future.

Tokyo's benchmark Nikkei 225 index, ended the morning session down 690 points from Wednesday's close. It lost more than 700 points at one stage. Stocks were sold across the board.

In New York on Wednesday, the Dow Jones Industrial Average dropped more than 400 points at one stage. The index closed slightly below the previous day's close for a second consecutive session.

Fed Chair Jerome Powell spoke to reporters after the policy meeting. He said there is room to raise interest rates and suggested that the central bank would reduce its bond holdings.

Investors now believe the bank could act sooner and more aggressively to tamp down inflation.