UPDATE 1-Yellen says Biden COVID bill to fuel "very strong" U.S. recovery

(Adds Yellen comments on employment, inflation)

By David Lawder and Susan Heavey

WASHINGTON, March 8 (Reuters) - U.S. Treasury Secretary Janet Yellen said on Monday that President Joe Biden's $1.9 trillion coronavirus aid package will provide enough resources to fuel a "very strong" U.S. economic recovery, but will not address longstanding inequality problems.

"This is a bill that will really provide Americans the relief they need to get to the other side of the pandemic, and we expect the resources here to really fuel a very strong economic recovery," Yellen said in an interview on MSNBC.

She repeated her expectations that the package would allow the United States to return to pre-pandemic "full employment" levels by next year.

Yellen said there would still be longstanding inequality problems in the economy that needed to be addressed by further legislation. The Biden administration agreed to drop an increase in the minimum wage to $15 as part of the COVID-19 package. The administration plans to pursue that separately and has proposed trillions of dollars in investments in infrastructure, education and research.

Asked about inflation if the increased spending causes the economy to run too hot, Yellen said she did not expect that to happen but "there are a lot of risks faced by this economy" and that the package addresses the biggest ones that can cause permanent scarring on people's lives.

"If it turns out to be inflationary, there are tools to deal with that, and we'll monitor that closely," Yellen said of the bill's measures.

Yellen said on Friday that she did not see higher long-term Treasury yields as a sign of inflation worries in financial markets, but anticipation of a U.S. recovery. (Reporting by David Lawder and Susan Heavey; Editing by Chizu Nomiyama and Andrea Ricci)