The People's Bank of China issued an inflation warning!

The People's Bank of China (PBOC) stated that it will protect the country's economy against inflation threats and announced that it will avoid excessive money printing with massive incentives to support growth.

In its quarterly monetary policy report released Wednesday, the PBOC pledged to both support the economy and ensure price stability. The bank also stated that it will provide stronger and higher quality support to the real economy.

“Structural inflation pressures may increase in the short run, and imported inflation pressure remains,” the report said. "We can't let our guard down easily," it said.

The announcements came after China's consumer inflation data soared to a 2-year high of 2.7 percent in July, largely driven by pork prices.

The expectation was for an increase of 2.9 percent. In China, annual producer inflation in July was 4.2 percent, below the expectation of 4.9 percent.

The PBOC predicted that consumer inflation could exceed 3 percent at some point in the second half of the year. However, the bank predicted that its target of keeping inflation close to 3 percent in 2022 will be met, thanks to measures to secure grain and energy supplies and prudent monetary policy.

Although economists do not consider the PBOC's statement as a signal that there will be a monetary policy tightening in the near future, they stated that the expectation of a easing step in the coming months has decreased.