# Forward Rate

*Quant & Pricing — Finicade finance glossary*

A forward rate is the interest rate for a future period implied by today's curve — what you can lock in now to borrow between years two and three. It follows from no-arbitrage rather than forecasting: if forwards differed from the rate implied by spot rates, you could borrow long and lend short for a riskless profit. Forwards are widely read as market expectations, though a term premium means they are consistently biased predictors.

**Formula:** `(1 + z₂)² = (1 + z₁) × (1 + forward rate)`

**Also known as:** implied forward rate, forward interest rate

**Related terms:** [Yield Curve](https://finicade.com/glossary/yield-curve), [Zero Rate](https://finicade.com/glossary/zero-rate), [Curve Bootstrapping](https://finicade.com/glossary/curve-bootstrapping), [Forward Rate Agreement (FRA)](https://finicade.com/glossary/forward-rate-agreement), [No-Arbitrage](https://finicade.com/glossary/no-arbitrage)

Source: https://finicade.com/glossary/forward-rate