Managers talk to each other. Your manager talks to his boss and says "really can't afford to lose this guy right now, so we need to give him enough to keep him." So he's making a case alright, but everyone in the chain knows
whyProblem is, now they know you're thinking of leaving. Since most of the time people do not leave over a few dollars, they assume, most likely correctly, that something else is pushing you to leave and the money is just delaying the inevitable.
When you do that to your manager, it demonstrates to him that he has a business risk which needs mitigating. So he keeps you for now while he tries to get someone else in a position to take over for you should you go through with your original plan to leave.
I've spent decades in the corporate world and I can't recall a single time that a forced raise like this ended up with either side happy, and nearly 100% of the time one year later the employee is gone for one reason or another.