Here, we have used the present tense in the first sentence. So, the second sentence should also be in the present tense. However, the action is continuing in the present so we use the present continuous tense. The syntax for present continuous tense (in interrogation) is: is/am/are + subject + verb (ing). 'I' is an exceptional case which takes the verb 'am'. Therefore, the correct option is: am decorating.