What is the right course of action?

Your answer to reduce speed and stay in the middle lane is correct because, according to German traffic rules, when you are driving in the middle lane (or any lane other than the rightmost lane) without overtaking, you should adapt your speed to avoid unnecessarily blocking faster traffic. The "Rechtsfahrgebot" (keep-right rule) requires drivers to use the right lane whenever possible and only use middle or left lanes for overtaking or if traffic conditions require otherwise.

If you maintain your speed and stay in the middle lane without overtaking (answer 2), you may impede other vehicles that want to pass, which is not permitted. Moving into the right lane at the same speed (answer 3) is usually advisable, but only if traffic and road conditions allow for a safe lane change, and if you are not in the process of overtaking. Therefore, reducing speed and staying in your lane when you are not overtaking ensures smoother traffic flow and compliance with traffic rules.