Grealish has been left out of City's Club World Cup squad and is now seeking a new club.
"He had a conversation with the club and they decided it was best," Guardiola said this morning from the US. "Jack is an exceptional player. The only reason why he didn’t play last season is of course my decisions.
"We decide that he has to play. The club was honest, he was honest. We decide that the best thing is to stay (behind) and have a place that he can feel like he can come back to be the player like he was in the year of the Treble or all his career in Aston Villa.
"Without him it would have been more difficult in the year of the Treble. The fact is in the last two seasons he didn’t play much minutes. He has to come back to play and have the butterflies in his stomach that he can play every three days, every three days and show again the quality he has."