The Blues go through to the next round after winning the last-16 tie 5-2 on aggregate.
Gabriel Jesus’ early goal was pegged back by Basel’s Mohamed Elyounoussi, before Michael Lang secured the win for the Swiss outfit.
It was only the fourth time that Guardiola has seen his side slip to defeat this season, and the manager is happy with his side’s progress.
“We are very happy to be in the quarter-finals again because that gives prestige,” Guardiola said.
“We did an almost immaculate group stage, knocking out one of the best teams in the world in Napoli and Shakhtar and we had a very good first leg and a good first half tonight.
“We were just lacking in the same feeling in the second half [tonight] which wasn’t good.
“We forgot to attack, we forgot to play, we passed the ball for the sake of passing the ball. Passing the ball means to pass the ball to move the opponents to attack, but to pass for the sake of passing is nothing. In the second half it was really, really poor.”
City made six changes from the 1-0 victory against Chelsea on Sunday, and Guardiola believes the shake up upset his side’s rhythm.
“You will find in all the clubs in the world that when you make six or seven changes, always the team is not the same,” he explained.
“From tomorrow we’ll be happy to be in the quarter-finals for the second time in this club. We are so happy for that. You have to be at a very high level to reach the semi-finals which is what the competition demands of you. We will try and we will compete well.”
Phil Foden started in midfield for City and impressed his manager with a stand-out performance.
“It was good,” Guardiola said of the 17-year-old’s display. “In the second half, maybe him with Leroy [Sané] he was the only one who was aggressive, who tried to do something with the ball and go forward. Leroy was the same.”
Jesus’ goal was his first since 18 November, and Guardiola believes that finding the target will boost the Brazilian’s confidence in his return from injury.
“Since he came back he has played in two or three games so it’s normal that it’s difficult to score a goal,” Guardiola said. “It was important that he played 90 minutes to find his rhythm. It will be good for his confidence the goal that he scored.
The draw for the Champions League last-16 takes place on Friday 16 March, and Guardiola insists that his side have no-one to fear.
He said: “When you are in the quarter-finals, the difference for example between Tottenham and Juventus is quite similar so at that level all the teams will be so, so tough and so demanding.
“We know we have to give good performance to compete in those situations but we will try to be ready for that. It is important to realise our level.”