He has dug in his heels and (so far) is unwilling to shift. Key, along with National Party strategists, would last night have been assessing the advisability of sticking to that line.
Even if he changed his mind, however, Key is now hamstrung by his laying a complaint with the police over the taping of his conversation with Banks.
The Prime Minister can hardly now cut across the police investigation by giving permission for the audio's release. However, that the police are investigating something so utterly and purely political is looking increasingly bizarre, silly, wasteful of police time and resources - and ultimately pointless.
Key is now in a real quandary. Does he allow the tape's release and reveal what is obviously embarrassing material? Or does he watch the contents leak out slowly and prolong the agony and accentuate the embarrassment?
And here's another question. What is there to stop Peters revealing all in tonight's TVNZ-hosted debate between the minor party leaders?
Are the police going to charge him with breaching the Crimes Act? "Make my day" would be Peters' likely reply.
Whatever, Brash goes into tonight's debate effectively kneecapped. He has taken on board Banks' assurances that nothing was said at the meeting which would undermine his leadership. Brash has adopted a "see no evil, hear no evil" disregard to suggestions the audio might contain something rather different.
This episode may be the nail that finally shuts the lid tight on Act's coffin. The symbolic cup of tea was supposed to shore up support for Banks in Epsom. It will be beginning to do the very opposite. The messy aftermath and questions over how long Brash will remain as Act's leader will, if anything, make Epsom voters even less inclined to give their electorate vote to Banks.
The Prime Minister's preference may be to try to ride this one out. But the price of doing so is becoming increasingly clear.
SIDELIGHTS
They said it: "I know how many volunteer hours go into putting up billboards and I want to say sorry to the National Party volunteers." - Greenco-leader Russel Norman apologises after a Green Party member was rumbled co-ordinating the defacing of up to 700 National billboards.
What is happening today: TVNZ minor party leaders' debate, TV One, 7pm-8.30pm.