China is likely to cut interest rates for the third time this year judging by the fall in inflation, an analyst says. In August, China's central bank shaved an average of 1.2 percentage points off the lending rates and 1.5 percentage points from deposit rates in its second rate cut this year. Interest on loans for one year has been cut to 10.08 per cent from 10.98 per cent, while rates on deposits for one year have dropped to 7.47 per cent from 9.18 per cent. Hoong Yik-luen, a China research strategist with Sassoon Securities, says with retail inflation having slowed to 5.8 per cent last month, compared with the average of 6.8 per cent for the first eight months of the year, there was room for a further rate cut. He expected to see a reduction of about half a percentage point for both deposits and loans about November. On May 1, the central bank cut deposit rates by an average 0.98 percentage point and lending rates by 0.75 percentage point. Economists had expected the August cuts to see a reduction of about 2 percentage points for deposits and loans.