A fixed interest rate refers to a specified, unchanging rate of interest that is applied to the principal amount of a loan or an investment over a predefined term. This means that throughout the term of the agreement, the interest rate remains constant and does not vary with changes in the broader market interest rates. Fixed interest rates provide borrowers and investors stability and predictability in their financial planning.

For example, if you take out a mortgage with a fixed interest rate of 3% per annum for 15 years, this rate will remain unaltered during the loan period, regardless of any rises or falls in general market interest rates. Likewise, a fixed-interest bond might pay a consistent coupon rate of 5% annually, ensuring stable returns to the investor throughout the bond's duration.

Using fixed interest rates comes with advantages and disadvantages. For borrowers, it protects from interest rate increases but might prove costlier if market rates fall significantly. For investors, it ensures steady returns but might underperform against variable interest investments in a rising interest rate environment. Overall, fixed interest rates are a common financial tool used widely in personal and corporate finance.