There is a significant chance that the Federal Reserve will embark on a third round of asset purchases to stimulate the U.S. economy, a major bond fund manager said on Tuesday.

Tad Rivelle, chief investment officer for fixed income at TCW in Los Angeles, told the Reuters 2012 Investment Outlook Summit in New York that if trailing consumer price inflation fell again, QE3 was probable.

Turning to the euro zone's sovereign debt crisis, Rivelle said abandonment of the euro was nearly impossible, for various logistical reasons.

You can't get the toothpaste back in the tube, he said. The euro will stand. Because the alternative is holocaust of some kind.

Rivelle also said the European Central Bank needed to follow in the Fed's footsteps and use monetization to quell the financial crisis that is still raging in the euro zone.

The only solution here is for the ECB to behave more like the Fed, Rivelle said. It needs to embrace its inner lender of last resort.