The US labor market is in a "powerful" recovery, with jobs increasing fast enough to keep the unemployment rate steady around 5 percent, Federal Reserve Vice Chair Stanley Fischer said Friday.

Speaking after the release of the solid October employment report, which showed the unemployment rate ticked down to 4.9 percent, Fischer said he believes the economy is nearly at full employment and will continue to grow at a moderate pace.

The employment and growth outlooks are key factors in whether the US central bank increases the benchmark interest rate next month, after policymakers decided to stand pat in their meeting this week.

However, in his remarks to an International Monetary Fund economics conference, Fischer gave no real hints about whether the Fed would move at its December 13-14 meeting, a year after the first and only post-crisis rate increase. He said only that "The markets put a probability of above 70 percent on the rate being increased in December."

Noting job gains have averaged of 181,000 a month this year, slower than last year at this time but enough to keep unemployment low, Fischer said: "This recovery has been and continues to be powerful in terms of one of our two main targets -- employment -- and it is my view that the labor market is close to full employment." 

Inflation has been stubbornly low, which has been a main factor in the Fed's reticence to  raise rates. However, the policy statement issued Wednesday indicated again that officials expect inflation to move higher, as the impact of lower oil prices and a strong dollar dissipates.

Fischer noted that the Fed's preferred inflation measure, the personal consumption expenditures (PCE) index, has reached 1.2 percent year-over-year and "can be expected to rise further toward our 2 percent target, supported by higher core PCE inflation, which ran at a 1.7 percent pace in September."

But he closed his speech with a tantalizing possible reference to the Fed's view of its inflation target.

In discussing the longer-term prospects for the economy, he said much would depend on "the behavior of output and inflation as we approach and perhaps to some extent exceed our employment and inflation targets."

Even mentioning exceeding the 2 percent inflation target could spark a hot debate, especially among those Fed officials who have argued for a rate increase earlier in the year, precisely to head off inflation.