A rotary cutting tool includes a tool holder and a tool body releasably attached thereto. The tool body has a cutting portion that includes a peripheral insert pocket, for retaining a cutting insert. The tool holder includes an adjustment arrangement that includes a biasing member, movably attached to the tool holder, having a biasing portion. The cutting portion is adjustable between a non-flexed position and a flexed position. In the flexed position, the cutting portion is elastically deformed in a forward direction due to biasing engagement with the biasing portion, thereby adjusting the axial position of the insert pocket and thus the cutting insert.