BEIJING (Aug 10): The People's Bank of China (PBOC) has said it will safeguard the economy against inflation threats, pledging to avoid massive stimulus and excessive money printing to spur growth.

The central bank will both support economic growth and ensure stable prices, the PBOC said in its quarterly monetary policy report released on Wednesday. At the same time, it will provide stronger and higher-quality support to the real economy, it said.

"Structural inflation pressure may increase in the short term, and the pressure of imported inflation remains," the PBOC said. "We can't lower our guards easily."

The PBOC's warnings came on the same day official data showed inflation accelerated in July to 2.7%, the highest level in two years, largely driven by food prices as pork costs surged. Weak consumer demand kept overall price pressures in check though.

The central bank said consumer price index (CPI) will likely exceed 3% in some months during the second half of the year. However, China will likely achieve the target of keeping full-year inflation around 3% in 2022, thanks to measures taken to ensure grain and energy supply as well as a prudent monetary policy, it said.

The PBOC has signalled in the past it will focus on boosting credit instead of cutting interest rates to support the economic recovery, while top leaders have raised concerns about potential inflation spillovers as prices soar in other major economies.

The central bank said on Wednesday factors that have contained inflation over the past two decades, such as globalisation, have reversed, and the recovery in domestic consumption may accelerate the transmission of factory inflation to consumers. The pickup of pork prices and China's reliance on imported gas and oil also created challenges, it said.

Soaring inflation in the US and Europe is a lesson for China's macroeconomic policies, the PBOC said. Maintaining a stable currency is the primary responsibility of a central bank, and keeping stable inflation is key, it said.

Acknowledging the tightening in monetary policy elsewhere, the PBOC said its unchanged policy interest rates in the second quarter have "helped maintain internal and external balance against the backdrop of interest rate hikes by major global central banks".