Reuters) - Two of the Federal Reserve's most hawkish policymakers on Thursday said they favored another 75-basis-point interest rate increase at the U.S. central bank's policy meeting this month, not the bigger rate hike traders had raced to price in after a report Wednesday showed inflation was accelerating.

The remarks from Fed Governor Christopher Waller and St. Louis Fed President James Bullard hit home, with markets swiftly reversing course to reflect the pair's preference, though still assigning about a 45% chance to a full percentage-point rate hike.

Waller, speaking at the Rocky Mountain Economic Summit in Victor, Idaho, said he would lean toward a larger hike if incoming data on retail sales or housing shows demand is not slowing fast enough to bring inflation down, or if inflation expectations worsened.

But, he said, "markets may have gotten ahead of themselves a little bit yesterday."

Despite the "major league disappointment" of this week's report showing inflation rose 9.1% in June from a year earlier, an "ugly" number was what he had expected, and only cemented his own view that a 75-basis point rate hike at the Fed's July 26-27 meeting would be appropriate.

"You don't want to, really, overdo the rate hikes," he said, noting that a three-quarters-percentage-point increase is still "huge" and shows the Fed is serious about bringing inflation back down to its 2% target.

"Don't say, because you are not going to 100, you are not doing your job," he said.