What is a forward rate?
A forward interest rate is the interest rate implied by current spot rates for a future period. For example, if you know the 1-year and 2-year spot rates, you can calculate the implied rate for the second year alone.
The formula
Forward Rate = [(1 + Long Spot Rate)^Long Period / (1 + Short Spot Rate)^Short Period]^(1 / (Long Period − Short Period)) − 1. This assumes no-arbitrage pricing between the two maturities.
This calculator is for general financial education and analysis practice, not investment advice. Actual forward rates observed in markets can differ due to liquidity, credit risk, and other factors not captured by this simple model.
Last reviewed August 2026