An interest rate swap (IRS) whose maturity doesn’t exceed 2 years. A short-term interest rate swap (STIRS) involves the settlement of a fixed swap rate against an average overnight interest rate in a specific period. Since short-term interest-rate swaps reflect current and expected monetary-policy interest rates, the spreads between the reference rates and short-term interest-rate swaps can be seen as an indication of the size of the liquidity and risk premiums.

An example of such a swap is the overnight index swap (OIS).