Although I'm strongly against racism, I think sometimes some admins are overdoing it. I see admins not banning their friends even saying worse words but when someone says a word they don't like "BADUM!", ban, I say we see some things with a more fair eye, not talking about MonsterCAT though, generally speaking. When we say a word that might not be pleasant to some people if noone complains it's better if we leave it. If the player keeps doing it then you could easily warn him, it wasn't a huge deal.
About this case, even if he thought it is racist, a warning was essential before the ban. Hell, I even kick after warning, I don't ban even the 2nd time a player does that.