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-pwfile option to supply a login password via the
command line (and, equivalently, the deprecated
option) are not very selective about which kinds of prompt they
will respond to.
In particular, if we needed to ask the user for the passphrase needed to decrypt a locally-stored private key, these options could suppress that prompt and supply the answer.
These options should only affect password requests that come from the remote server. (If you want to avoid being prompted for a local key's passphrase, there are better ways of doing that.)
(This could be particularly awkward in the case of a server that requires multiple types of authentication in sequence.)