It seems like being xenophobic is a deliberate part of his character (look at how he treats Cardassians too); but I am always taken aback when he says something awful, because it feels so out of place in the optimistic future.
Plus, it seems like even the other in-universe characters are bothered by it (Keiko and Dr. Bashir have raised issues with it by the episode I am up to), so it is extra strange that he is “allowed” to just go around being casually xenophobic and hasn’t been sent to Federation sensitivity training or something.