ISSEI KATO/REUTERS

FROM THE TIME ARCHIVE Time For Hardball? President Bush prepares to visit a Japan whose limp economy could pull the rest of the world down too [2/18/2002]

Credit Fukui's success to unconventional thinking. His predecessor, Masaru Hayami, frequently claimed there was little he could do to stoke Japan's economic fires after he lowered interest rates to zero. But Fukui has boldly set out a series of unorthodox monetary-easing programs designed to counteract the country's crippling six-year bout of deflation, flooding the nation with cash. "Fukui has been activist and interventionist," says Shuji Shirota, an economist at the Dresdner Kleinwort Wasserstein investment bank in Tokyo. Fukui's efforts are having an impact: consumer-price deflation slowed to 0.3% last year, compared with 0.9% in 2002.

Fukui is also the first Bank of Japan governor in years not to brawl openly with other branches of the government. "For the first time in a long time, Japan has something approaching integrated monetary, fiscal, banking and competitiveness policies," says Koll. But few doubt that Fukui's greatest challenges lie ahead of him. With the economy picking up, a rise in interest rates seems likely. Japan's recovery remains fragile, however, and hiking rates in an economy accustomed to free money is risky. Still, the world's second largest economy is finally battling back with conviction. The question now is whether Fukui and Japan can complete the job.

Feb. 10, 1992	Nov. 22, 1954	April. 13, 1987
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