Implied Rate

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Dictionary Says

Definition of 'Implied Rate'


An interest rate that is determined by the difference between the spot rate and the forward/futures rate. The degree of relative costliness of a future rate can be assessed by comparing the implied rate with the spot rate.

Calculated as:



Implied Rate
Investopedia Says

Investopedia explains 'Implied Rate'


For example, if the present spot rate of LIBOR is 5% and the forward rate for LIBOR is 6%, the implied rate is 1%. This situation merits the impression that the future rate for borrowing will be more expensive.

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