John is studying the relationship between spot rates and forward rates for a particular bond market. He learns that the forward rate is the interest rate agreed upon today for a loan that will occur in the future. To further understand this concept, he comes across an example.

Assuming the current one-year spot rate is 2% and the two-year spot rate is 2.5%, John wonders about the one-year forward rate one year from now. What is the correct forward rate?