The Director of Research at the Institute of Economic Affairs, Dr. John Kwakye is warning of further hikes in inflation if the Bank of Ghana phases out the 1 and 2 notes as planned.

In a tweet, he said the planned move will not only put pressure on the 5 note but will also trigger higher inflation.

“Phasing out 1 and 2 cedi notes from the economy as planned by BoG will not only put pressure on the 5 cedi notes, but will also further fuel inflation”

Dr. Kwakye who is an immediate past member of the Monetary Policy Committee of the Bank of Ghana explained further that the country may undertake a redenomination of the local currency again in the future if it does not address the rapid depreciation of the cedi and inflation.

“If we don’t rein in inflation and cedi depreciation, it won’t be long before we undertake another redenomination.”

The country’s inflation is one of the highest on the continent so far this year.

It hit 33.9% in August 2022, the highest in 21 years, data from the Ghana Statistical Service (GSS) revealed.

This is expected to increase the cost of borrowing by raising interest rates further, and consequently trigger increase cost of living and doing business.