Implied pricing methods are used to predict how interest rates will change based on market prices of options. By analyzing cap prices, researchers were able to determine the local volatility functions of forward LIBOR rates. This information helps predict future interest rate movements and can be used to price complex interest rate options. The study focused on using a spline functional approach to recover these local volatilities, making it easier to calculate the drifts of forward LIBOR rates. This method simplifies the process of predicting interest rate changes and can be applied to various financial products.