A forward rate which applies for a very short period of time in the future (e.g., one day, a few hours, etc.) It can be perceived as the rate attached to a derivative for an infinitesimal amount of time measured as at a specific date, assuming a given start-value date. The instantaneous forward rate represents the marginal change (increase, decrease) in the total rate differential from a marginal change (increase, decrease) in the time horizon.

The current value of the instantaneous forward rate for a certain future date constitutes the expected value of the spot rate for that date in addition to other terms that will typically include a specific risk premium.