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 ?
To judge from implicit forward interest rates, market operators are expecting an increase in the repo rate early in 2006 (see Diagram 65).
1995): "Estimating forward interest rates with the extended Nelson and Siegel Method", Quarterly Review, 1995:3, Sveriges riks-bank
The authors show that these results also are matched by the times-series behavior of far-ahead forward interest rates and inflation compensation over this period.
By comparing implied forward interest rates, which are obtained from zero-coupon yield curves and the euro area, C & R are able to deduce the markets expectations for Hungary's euro conversion date.
The most important ingredient of the HJM term structure models is the choice of a volatility structure for forward interest rates.
To choose between these hypotheses, we examine how monetary policy surprises affect daily traded commodity prices, term interest rates, and forward interest rates.
Our strategy is to take as a basis the forward interest rates implied by the current spot treasury curve.
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.
From a continuous function for the zero-coupon rates, it is relatively straightforward to calculate a continuous curve of implied forward interest rates.
Forward swaps are used to take a view on forward interest rates, amortizing swaps are used to match the underlying principal to an amortizing loan, while zero-coupon swaps are useful if the floating rate receiver has a short-term cash flow deficit.
Previously, I have worked on practical ways of estimating and interpreting forward interest rates for monetary policy purposes, see M.
In 1999 and 2000, forecasting was based on the assumption that the interest rate would develop in line with market expectations as indicated by forward interest rates.

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