The following is from the San Francisco Federal Reserve’s web site: “The San Francisco Fed has launched a new data page that helps gauge the stance of monetary policy under various types of actions. The Proxy Funds Rate focuses on financial market indicators, which show the influence of the Fed’s forward guidance and asset sheet actions beyond what can be seen through the level of the federal funds rate.

For many years, the Federal Open Market Committee (FOMC) conducted monetary policy solely through changes in the federal funds rate—the short-term interest rate that is the basis for other interest rates in the U.S. economy. However, to help the economy recover from the Great Recession, the FOMC needed to begin relying on additional ways of putting policy into action, specifically through forward guidance and the balance sheet.
Using these new tools is an effective way of helping the Fed guide the economy toward its dual mandate goal of stable prices and maximum employment.