The Nikkei tumbles 2.1% and adds to sharp losses from the previous session after the Bank of Japan yesterday refrained from adding extra stimulus and expressed its contentment with the economy.
However, economist Marcel Thieliant believes the BOJ will eventually change tack. "We still think the BOJ will have to ease more, and that inflation will be short of its target by the year-end," Thieliant says.
Elsewhere in Asia, shares rise after Wall Street ended a three-day losing streak yesterday.
Hong Kong +0.8%, China +0.3%, India +0.3%.