BEIJING, March 21 (Xinhua) -- Inflation in China is not expected to increase significantly over the medium term even though consumer prices have spiked over the past four months, said Zhou Xiaochuan, governor of the People's Bank of China.

Speaking at the ongoing annual meeting of the Inter-American Development Bank (IDB) in Guatemala City, Zhou said 'we are concerned about a tendency toward greater inflation, not the current inflation level.'

In 2006, China's economy grew 10.7 percent, while the consumer price index (CPI), a major inflation indicator rose 1.5 percent last year.

After hitting a 20-month high in November of 1.9 percent the index followed in subsequent months with increases of 2.8 percent, 2.2 percent and 2.7 percent, giving rise to public concerns about a higher inflation rate.

The Chinese government's aim is to keep the country's CPI under three percent in 2007, according to the government work report Premier Wen Jiabao delivered at this year's 12-day session of the National People's Congress.

Last week the central bank raised key interest rates by more than a quarter percentage point in a bid to help 'preserve price stability' and prevent inflation from exacerbating.

Zhou also told the meeting that China would continue to restructure its economy to encourage great domestic consumption and the economy was not likely to make a hard landing.

The depreciation of the U.S. dollar would not have a great impact on China's economy, he added.

Zhou, on behalf of the Chinese government, signed a memorandum of understanding with the IDB that provides a framework for the possible admission of China as a member of the world's largest regional development bank.

Xinhua Editor: Chen Feng