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Mr Key said he was "silly" and "misread the tea leaves" when he repeatedly pulled Ms Bailey's hair.
But he said he would learn from the incident, Radio New Zealand reported.
Mr Key told RNZ he took "full responsibility" for the situation at the cafe.
"That's been one of my strengths that I'm pretty casual and laid back and good for a laugh a lot of times, but that's also led to a situation where I've been too casual - having too much fun if you like in a situation, playing along a little bit and that's been very silly on my part."
Mr Key said his actions were a little silly and he understood how the incidents looked more serious now than they seemed at the time.
"There were clearly a few hijinks and a bit of horsing around. I think in hindsight and on reflection, I should not have been as casual as that," he told RNZ.
"I should have read the situation more accurately. I'll learn from the experience."
He said he would learn from the experience.