With this, the MPR is between 150 and 200 bp below its levels considered neutral. The speed with which we have made this reduction responds to our conviction that the medium-term inflation outlook was revealing a scenario that jeopardized the fulfillment of the policy goal. All this, because of the implications that the evolution of the macro scenario, in particular weak activity, had on them. Considering the cuts already made, we believe that monetary policy is now highly expansionary and consistent with inflation at 3% over the projection horizon. Within this horizon we will see in the coming months that annual inflation will fall again, approaching 2%. We will also see months of poor activity, as shown by the latest Imacec. But the improvement in external conditions, the disappearance of specific factors that have affected activity and prices, and the monetary impulse itself, will allow the economy to regain more growth in the second half of this year and in 2018, with capacity gaps that will begin to close in the course of 2018 at the same time that inflation will converge to the policy target. This, by the way, does not mean that the MPR will not be adjusted again, but that in the most likely scenario no new changes are needed, and that the most important thing will be to let the monetary impulse permeate the economy for as long as necessary in order that, combined with the other mentioned factors, it will generate a visible convergence to the policy target.
Our track record of the last year and a half provides a good example of how flexible our monetary policy is to respond to significant changes in economic conditions. In hindsight, monetary policy remained expansionary with a stable MPR between October 2014 and September 2015, despite the increase in inflation resulting from a sharp exchange rate depreciation, rightly interpreting that it was a transitory phenomenon derived from supply-side pressures on prices. Towards the end of 2015, a normalization process began, sustained on a scenario where growth was projected to equal potential, and with bounded capacity gaps. This adjustment, however, occurred gradually and prudently, with an increase of 25 basis points in the MPR in October and December 2015. This prudence, accompanied by a vision focused on the future prospects of the economy, allowed the monetary policy orientation to be adjusted quickly when the macro scenario began to change. Indeed, the exchange rate appreciation and signs of weakening in the first half of 2016 led the Bank to revise its inflation and growth projections. As these adjustments revealed a new macroeconomic scenario, characterized by weak economic activity, greater exchange rate stability and a faster deceleration of inflation, the Bank successively adjusted its monetary policy options and bias, culminating in four 25-bp cuts in the policy rate in the last five months. Thus, in response to changes in the medium-term macroeconomic scenario, the MPR has accumulated a decline of 100 bp since January of this year, to 2.5%.