The ASX 200 is on track for a new all-time closing high!

Investors are sending the ASX 200 soaring to within reach of a new record high. But why?

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It's quite a day for the S&P/ASX 200 Index (ASX: XJO).

The benchmark Aussie index finished up 2.0% last week, closing on Friday at 8,099.9 points.

That left the ASX 200 just shy of its record closing high of 8114.7 points, notched on 1 August.

But that record looks set to be broken.

In morning trade on Monday, the index of the top 200 listed Aussie companies is up 0.5% at 8,142.6 points. If the index can hold onto these gains through the end of the day, today's close will mark the new high water point.

It's also getting within a whisker of setting a new all-time intraday high above the 8148.7 point current record, also set on 1 August.

As you can see on the chart above, the benchmark index has been in a solid uptrend for most of the past year, gaining 12.6%. And that doesn't include the dividends many top companies pay their shareholders.

To give you an idea of how much difference those passive income payouts can make in your accumulated returns in just one year, the S&P/ASX 200 Gross Total Return Index (ASX: XJT), which includes all cash dividends reinvested on the ex-dividend date, has gained 16.9% over the 12 months.

What's boosting the ASX 200 to within new highs?

The Aussie stock market is getting a boost from several fronts today.

First, it doesn't hurt that the two biggest companies on the benchmark index by market cap, Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP), are both marching higher.

At the time of writing, CBA shares are up 0.9% at $142.89 apiece, while BHP shares are up a slimmer 0.1% at $39.63.

But much of the investor exuberance that's sending the ASX 200 skyward today stems from growing optimism that inflation across most of the developed world is coming back within central banks' target ranges, and interest rates are finally coming down.

Last week, the European Central Bank (ECB) cut the Eurozone's official interest rate for the second time this year. With Europe's economy slowing and inflation seemingly in check, the ECB reduced interest rates by 0.25% to the new 3.50%.

Next week, we have the Reserve Bank of Australia's rate call to look forward to. While the RBA is still likely to keep rates on hold, investors will be keenly listening for signs of when easing may be expected.

Among the biggest potentially bullish drivers for global stocks and the ASX 200 this week is Wednesday's interest rate decision by the US Federal Reserve, which will impact Aussie markets commencing Thursday morning.

The official US rate still stands in the range of 5.25% to 5.50%.

According to the markets, a Fed interest rate cut is all but guaranteed.

The big question now is whether the Fed will cut by 0.25% or go for the full 0.50% cut to keep the world's top economy humming along.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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