Uncovered interest rate parity (UIP) theorizes that the difference in two countries' interest rates equals the expected changes between their currency exchange rates.

Covered interest rate parity refers to a theoretical condition in which the relationship between interest rates and the spot and forward currency values of two countries are in equilibrium.

For about three decades until the Global Financial Crisis (GFC), Covered Interest Parity (CIP) appeared to hold quite closely—even as a broad macroeconomic relationship applying to daily or weekly ...

We study the behavior of Covered Interest Parity (CIP) deviations – aka the CIP basis - in Emerging Markets (EM). A major challenge in computing the CIP basis in EM’s lies in measuring local currency ...

Interest rate forecast 2026. Economists anticipate interest rates will drift lower at a slower pace in 2026. The FOMC projects fed funds rates of 2.9% at year-end 2026 and 2027.

For example, the same loan at a 5% interest rate paid over 10 years will cost you about $1,273 per month, or more than $32,000 in interest payments beyond your $120,000 principal amount.