What should you do now?

Your answer is correct because slowing down to walking pace and being ready to brake are essential safety measures when approaching a cyclist from behind in this setting.

In German traffic rules, when you approach a cyclist on the road, you must slow down significantly to avoid startling the cyclist or causing a dangerous situation. Slowing to walking pace ensures you have full control and can react safely.

Remaining ready to brake is also important because cyclists can change speed or direction unexpectedly, and you must be prepared to stop safely if necessary.

Overtaking the cyclist at this moment would be unsafe, especially if visibility is limited or if there is not enough space to pass safely.

So, by selecting to slow down and stay ready to brake, you are following the correct procedure to ensure the safety of both yourself and the cyclist.