Interest Rate Futures

Interest rate futures are financial contracts that allow investors to speculate or hedge against future changes in interest rates. They enable buyers and sellers to agree on an interest rate for a specific future date. For example, if you expect rates to rise, you might sell a futures contract; if rates go up, your contract will increase in value. Conversely, if you think rates will fall, you might buy a contract. These tools help manage financial risk for businesses, banks, and investors, providing a way to stabilize income or costs related to borrowing and lending.