The U.S. Federal Reserve will trigger a third round of quantitative easing (QE3) in September to offer a floor under markets confidence and to keep the economy from weakening, Bank of America Merrill Lynch analysts said on Wednesday.

The investment bank predicted that U.S. economic growth would slow down to 1 percent in the second half this year.

At the BofA Merrill Lynch Global Research 2012 Mid-year press conference, the analysts agreed that the Fed would act in September with QE3.

With QE3, the Fed will expand the balance sheet by assets purchasing. According to estimates, the Fed might buy 500 billion dollars in mortgage-backed securities to prevent the economy from deflationary decline and high unemployment rates.

"Our forecast is 500 billion dollars for QE3 in September concentrated in the mortgage market. This is on top of Operation Twist," said Priya Misra, head of U.S. rates strategy at BofA Merrill Lynch.

At the Fed's latest policy meeting, the Central Bank has decided to extend Operation Twist to the end of 2012. Under this program, the Fed will sell another 267 billion dollars of shorter- term bonds and buy the same amount of longer-term bonds, in an effort to pushing down the long-term interest rates.

Since the financial crisis, the Fed had rolled out two rounds of QE, purchasing 1.7 trillion dollars in Treasury instruments held by banks and another 600 billion dollars in mortgage securities. Despite all the liquidity, U.S. economy still remained vulnerable, which caused suspects about the effects of the possible QE3.

"Unfortunately, as the Fed has admitted, every additional round of QE has diminishing returns, especially in terms of feeding into the overall economy. We don't think it will play a very big role the job numbers or GDP," said Meyer.

"But, we think if they were not to do QE, the economy would look weaker," Meyer added.

Besides continuing high unemployment rate, impaired credit and household deleveraging, U.S. economy would face rising challenges from risks of fiscal cliff and European spillover in the second half this year, said Meyer.

The fiscal cliff alone could threaten U.S. economy with a shock of as much as 4.5-percent of GDP, said the bank.