Forward interest rate

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Forward interest rate

Interest rate fixed today on a loan to be made at some future date.

Forward Interest Rate

An interest rate to which a borrower and lender agree for a loan to be made in the future. According to the unbiased expectations hypothesis, forward interest rates predict spot interest rates at the time the loan is actually made, but many analysts dispute whether this is true.
References in periodicals archive ?
Sterling forward interest rates, which had almost completely priced in a cut on Thursday, shifted briefly to remove any chance of rates going lower than 0.
Besides, under a forward interest rate swap agreement, it effectively fixed LIBOR at 2.
Rules also state that depositors should not lose interest accrued at the time of withdrawal, on the amount withdrawn or the remaining amount and going forward interest should not be lost on remaining funds solely as a result of managing to the limit, except when the amount of the remaining deposit would put the deposit into a lower tier of interest rates under the original terms of the product.
As a response, ICBC has rolled out foreign exchange hedging products and helped enterprises avoid risks of exchange rate and interest rate by adopting financial instruments such as forward exchange rate and forward interest rate, swap, option and hybrid instruments.
This is because one can observe forward interest rates in the market, but one cannot directly observe the expected inflation rates.
The meeting, chaired by President Xi Jinping, called for keeping reasonable growth in credit and social financing next year, while pushing forward interest rate and yuan currency reforms.
The rise in long-term rates has been so pronounced that it has pulled the front end of the yield and swap curve higher with it, and forward interest rates for late 2014 have risen sharply, to the extent that they are more or less pricing-in a policy move.
This is also what the market expects, to judge from both the pricing of forward contracts (RIBA forwards) and implicit forward interest rates (see Diagram 12).
Furthermore, inflation pressure is building, which should bring forward interest rate rises in the developed markets and encourage policy tightening in emerging markets.
In addition to the decomposition of nominal interest rates described above, we can also decompose term interest rates into a series of shorter spot and implied forward interest rates.
Tim Grey, director of Pontyclun-based homebuilders Llanmoor homes "Of course this last year hasn't been our best but we have to take encouragement from the fact that sales are up in what are still very difficult market conditions - and the outlook for 2011 is even better if forward interest is anything to go by.
Common rights included are the rights to collect mortgage payments monthly, to set aside taxes and insurance premiums in escrow, and to forward interest and principle to the mortgage lender.

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