3 ideas:
- expect (password saved somewhere)
- public key authentication
- (sleep-for 1) in macro

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Hi Peter,
I tried the (sleep-for 3) idea - there seems to be a problem though - for some reason, when I playback the macro, the sleep happens first and then the whole thing gets typed. 

What I did was, record the macro and then edit it and insert the M-: (sleep-for 3)C-j right after the return key after the ssh command.

regards,
Kashyap