The config file incorrectly mentions the --private-key-file flag.
Should be --private-key

If PasswordAuthentication is enabled (which is the default) ansible 
will spawn (multiple) ssh's with a password-prompt which corrupts 
the terminal, and cannot be properly used.

So it is better to not allow for password-based authentication using 
-c ssh. The result is that authentication fails but Ansible 
continues to work

The global config file is loaded from /etc/ansible, not /etc