* Orphanides says policy has to remain accommodative -FT
* Worried about too-low inflation expectations
* Says sees non-inflationary recovery
* Says unthinkable that Greece would default
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FRANKFURT, Dec 21 (Reuters) - The European Central Bank's monetary policy needs to remain accommodative enough to avoid the risk of inflation undershooting for a long time, ECB Governing Council member Athanasios Orphanides was quoted on Monday as saying.
He said he was concerned about ECB staff projections showing inflation was expected to undershoot the 16-country bloc central bank's target of below, but close to 2 percent for 2009 - 2011.
"We need to watch this very carefully because in my view it would be problematic if this deviation of inflation from our definition of price stability became embedded in expectations," Orphanides told daily Financial Times in an interview published on the paper's website.
"Indeed such a deviation would risk de-anchoring inflation expectations on the downside."
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When asked how to prevent low inflation expectations from becoming embedded, he was quoted as saying monetary policy should remain sufficiently accommodative for as long as necessary.
"We need to ensure that policy remains sufficiently accommodative in order to avoid the risk of a very extended period of undershooting."
Orphanides also said the ECB's current interest rates -- now at a record low 1 percent -- are appropriate.
He also said the economic recovery would be non-inflationary as there is a lot of unused capacity at the moment.
"There is considerable room for expansion in the economy without material concerns about inflation pressures," he said.
NO RATE SIGNAL
Orphanides also said the phasing-out of non-conventional measures should not be taken as a rate signal, repeating a line used by ECB President Jean-Claude Trichet earlier this month.
He also said not all extraordinary measures taken by the central bank would be phased out.
"I think the phasing-out of some -- I stress 'some' -- of the unconventional measures is appropriate," Orphanides told the paper in the interview conducted on Dec. 16.
"We are continuing our policy of full allotment (in liquidity operations) at a fixed rate which ensures that we avoid undesirable increases in interest rates."
In addition to unlimited liquidity, the ECB has given banks loans for longer periods than before the crisis -- it said earlier this month it would discontinue 12-month and 6-six month tenders -- and has started a 60-billion-euro covered bond purchase programme.
Orphanides was also quoted as saying there was no risk of a euro-zone country defaulting on its debt, after Greece was this month downgraded to BBB+ by ratings agency Fitch and Standard and Poor's and deficit estimates for this year have ballooned to 12.7 percent of gross domestic product (GDP).
"I consider it unthinkable that a euro area country would default," he said.
This chimes with fellow Governing Council member Ewald Nowotny of Austria, who said the ECB's baseline scenario was that Greece can pay back its debt obligations.
Orphanides also said Greece should not expect other European Union countries to come to its rescue.
"The (EU) rules do not call for other countries volunteering to come in," he said.
(For a full transcript of the interview, please see: http://www.ft.com/cms/s/0/abe38676-ee36-11de-a274-00144feab49a.html) (Reporting by Krista Hughes and Sakari Suoninen; editing by Stephen Nisbet)