QUICK DEFINITION
Forward Rate is an interest rate implied today for borrowing or investing during a future period.
WHY IT MATTERS
Why Forward Rate matters in bond markets
Forward rates help decompose the yield curve and show the future rate path embedded in current market prices.
MARKET CONTEXT
How to think about it
Bond investors use forward rate as part of a wider framework that links prices, yields, cash flows, liquidity and risk. The concept should therefore be read together with its related terms rather than as an isolated definition.
Is Forward Rate important for fixed-income investors?
← Back to the Bond Market Glossary Yes. Forward rates help decompose the yield curve and show the future rate path embedded in current market prices.