Interest Rate Futures

Overview

Interest rates, loosely defined as the price of money, are determined by the market forces of supply and demand. They influence personal and commercial activities, such as the cost of a home mortgage, the charge applied to a credit card balance, or the interest received on a savings account.  An interest rate future is a financial derivative with an interest bearing instrument as the underlying asset.  These structures are utilised by investors with specific views on the interest rate movements.

Benefits of Interest Rate Futures

• Protection of interest rate related assets and liabilities from the impact of price volatility
• Opportunities to profit from the accuracy of predictions on interest rates movements