S&P 500 downplays after Fed raises interest rate

The SPDR S&P 500 SPY is moving lower, after the Federal ReserveFederal Reserve raised its benchmark rate by 0.25% on Wednesday, marking the central bank's second consecutive policy downshift.

What To Know: Wednesday's 0.25% rate hike brings the target funds rate to a new range between 4.5% and 4.75%, the highest level since before the 2008 financial crisis.

The move was in line with average economist expectations and comes in the wake of a downshift from the Fed in December. At its last meeting, the central bank opted for a 0.5% hike, which was preceded by four straight 0.75% rate hikes.

The Fed said on Wednesday it will continue its plan to let Treasury securities and agency debt and agency mortgage-backed securities roll off its balance sheet on a monthly basis, as described in its previously announced plans.

The Committee anticipates that continuing increases in the target range will be appropriate in order to achieve a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time, the Fed said in the FOMC statement.

All 12 Fed members voted in favor of the 0.25% hike.

Why is the SPY moving lower? The central bank made it clear that ongoing increases will be appropriate, despite the fact that the Fed seems to be winding down its response to high inflation.

The Consumer Price Index CPI was up 6.5% in December, down from 7.1% in November and significantly lower than its peak of 9.1% in June.

Gross domestic product GDP increased by 2.9% in the fourth quarter, according to an advance estimate from last week. A second estimated fourth-quarter GDP number based on more complete data will be released on February 23.

According to CME Group data, the bond market is projected to have an 84.7% chance of a subsequent 0.25% hike in March and a 15.2% chance of a pause.

Fed Chair Jerome Powell has reaffirmed the central bank's commitment to bring inflation back to its 2% goal several times in the last few months. He has been firm in saying that the Fed will stay the course until the job is done. The Fed will look at a number of new data before it makes a decision on rates in late March, the most important of which is the January CPI print due two weeks from Wednesday.

SPY Price Action: The SPY is down 0.59% at $404.09 at the time of writing, according to Benzinga Pro.