Asia-Pacific markets dipped on Thursday, tracking losses on Wall Street that saw the Dow Jones Industrial Average touch a new closing low for the year.

The Federal Reserve held its key policy rate steady at 3.5% to 3.75%, with Chair Jerome Powell watering down rate-cut expectations, saying that inflation was not coming down as much as ‘hoped.’

The producer price index — which tracks the change in wholesale prices — rose 0.7% in February, well above the 0.3% that economists polled by Dow Jones had estimated.

Despite that, the U.S. central bank’s “dot plot” still projects a cut in 2026 and another in 2027, even though the timing is unclear.

The Iran war continues to fuel energy worries. International benchmark Brent crude futures rose 3.83% to settle at $107.38 per barrel.

U.S. oil prices were trading at elevated levels as well, with West Texas Intermediate futures closing marginally higher at $96.32 per barrel.

Investors in Asia will look toward the Bank of Japan decision, with the bank expected to hold rates at 0.75%.

South Korea’s Kospi lost 2.56%, leading losses in Asia after being the top gainer in the region on Wednesday, while the small-cap Kosdaq saw a smaller loss of 1.73%.

Chip heavyweights Samsung Electronics and SK Hynix saw losses of over 3%.

Japan’s Nikkei 225 was down 2.47%, while the broad-based Topix was 1.82% lower.

Australia’s S&P/ASX 200 started the day down 1.5%.

Hong Kong’s Hang Seng index futures were at 25,479, lower than the HSI’s last close of 26,025.42.

Overnight in the U.S., the 30-stock Dow lost 1.63%, ending at 46,225.15, reaching a new low this year. The index also closed below its 200-day moving average.

The S&P 500 fell 1.36%, while the Nasdaq Composite dropped 1.46%.

—CNBC’s Sean Conlon, Pia Singh and Jeff Cox contributed to this report.